Compare and find the best personal loan rates in UAE. We'll show you everything you need to know about getting the best rates on a personal loan.
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A personal loan may act as a go-to loan for a lot of people. It can be used for planning a sudden vacation, wedding, buying something costly, or when in dire need of cash. A personal loan is a type of unsecured loan, that is, there is no need of collateral to avail this loan. The rate of interest on personal loans is calculated either on a flat rate basis or on reducing balance method. Interest rates on personal loans are comparatively high, mainly because they are not secured and involve risk up to some extent. But these rates are relatively low in the UAE, as compared to other countries.
There are various purposes for which you may visit a bank in order to borrow funds. There are also various personal loan rejection reasons faced by people.
Personal loans can be helpful when there is a short term need for cash. Hence, a personal loan rejection might prove to be an unwanted surprise. In order to avoid this, you should know as well as understand the various reasons that are generally the attributes depending upon which your personal loan application is rejected.
Each bank will check the status of employment and its stability before proceeding further with the personal loan application. If you have had ups & downs in the track record of your employment or an unstable history, then there can be a high probability of your loan application being rejected.
Banks may also check whether your employer is a part of their approved list of employers or companies in the UAE. This is generally done in order to check whether your income or employment is secured or not. It also makes sure if your company is doing well or not. Usually, big organizations are listed, and in case of the employees of listed companies, it becomes easy to avail the personal loan.
While the lender processes your application to get a personal loan in UAE, one of the important eligibility requirements for approval is to have a certain amount of regular monthly salary (as determined by the bank) either through a business or a job.
If the monthly income you are earning does not fulfill the eligibility requirement of the bank, then the possibility of the rejection of your loan increases. Your income is an important factor as it adds to your capacity of repaying the loan.
Hence, in case you do not fulfill the minimum salary requirement as determined by the loan provider, they will doubt your loan repayment capability.
Another reason why your personal loan gets rejected could be the submission of invalid or incomplete documents. Providing the correct documents that confirm your eligibility for the loan is essential for getting your application approved.
Hence, you must make sure that you pay attention to all the guidelines for a personal loan application before submitting the documents. You should stick to the document list, which you need to submit. You can also make a list by yourself for ensuring that you do not miss any necessary document.
In simple words, Debt-Burden Ratio is the effect of debts on your income or the amount of debt you need to pay out of your salary. As per the central bank of the UAE, the EMI must not exceed 50 percent. That is, your loan will not be approved in case your DBR is more than 50 percent of your income. You can use the DBR calculator for calculating the DBR.
The banks can get hold of your credit report through the al etihad credit bureau and go through your DBR. They will also get to know about the default in payments made by you (if any) and the number of credit cards you own. These factors significantly contribute to the loan application approval and processing. Your credit score is a 3-digit score given to all individuals. The higher your credit score is, the more are the chances of getting one of the best personal loan in UAE.
|How to check credit score in UAE|
All these attributes play an essential role in approving the application of your personal loan. A low or poor credit score might be a major reason for the rejection of your personal loan application.
In case you are applying for a personal loan in Dubai or any other Emirate of the UAE for the first time and have no clue what a credit score is-
Your credit score is typically a three-digit score provided to every individual. In the Emirates, an average credit score ranges from 300 to 900. Higher the credit score, higher are the chances of loan approval.
Other than your income eligibility and credit score, there are various other eligibility requirements for obtaining a personal loan in the UAE. These requirements include nationality, age, residence, and at times your educational qualification, which you need to have.
Usually, your lenders go through your loan application multiple times because of all these reasons. Ensure that you meet all these eligibility requirements as determined by the lender, such that you leave no scope of loan rejection.
The banks and other financial institutions may thoroughly check your financial profile, even if you have borrowed a loan from some other lenders. Hence, it is highly recommended that you get a personal loan in UAE only when you really need it.
In case you have multiple existing debts with the bank already, then the probability of your personal loan getting rejected is higher. Since your debt-income ratio is high, it indicates that your ability to repay the loan on time is low.
You should make sure that the loan you are applying for caters to your requirements efficiently. Other than personal loans, there are other loans that can be used for specific purposes only. For example, you cannot use a home loan for car financing. Your lender checks if the reason you have mentioned for taking the loan is the same as your actual requirement or not.
Usually, an eligible age for availing a personal loan in UAE is 21 years minimum, and 65 years maximum at the time of maturity. In case you do not fall under this range of age, then there are chances of personal loan rejection.
The above-mentioned factors or attributes act as the eligibility criteria to apply for a personal loan. The applicant can avail the loan only when he meets this criterion otherwise the bank rejects their loan.
You would never want your personal loan application to get rejected. Here are a few tips on how to ensure the approval of personal loan application.
The Final Word!
Though little, but it takes some amount of time and effort in applying for a personal loan in the UAE. However, it only takes a few seconds to reject the application. Make sure you compare all the options available and weigh all of them before you apply for one.